Mexico COP16/MOP6 Leader Paints Positive Outcome Picture

Dec 5: Despite growing skepticism about the success of the United Nations Framework Convention on Climate Change Conference (UNFCCC) being held in Cancun, Mexico, and diminishing political support for the climate change issue in the U.S.; the United Nations is reporting that two bodies within UNFCCC have concluded their work on a number of significant draft decisions that will be presented for adoption on Friday, December 10, in the final plenary of the Conference of the Parties (COP16) and the sixth Meeting of the Parties to the Kyoto Protocol (CMP6 or MOP6).

 

    The two groups -- the Subsidiary Body for Scientific and Technological Advice (SBSTA) and the Subsidiary Body for Implementation (SBI) -- concluded their deliberations yesterday with draft decisions on continued, strengthened support to developing countries efforts in climate change adaptation and mitigation, including concrete technology transfer projects, UNFCCC said in a statement. Patricia Espinosa, President of the Conference and Secretary for Foreign Affairs of Mexico said, "These advances form an important part of the groundwork for strengthened global climate change action," said They also clearly show that countries have come to Cancún in good faith to show the world that the multilateral process can deliver as long as a spirit of compromise, cooperation and transparency prevails."

 

    Espinosa added that the progress "should be seen as a positive sign for the conference as a whole," and urged all UNFCCC Parties to maintain the spirit of compromise with a view to reaching a balanced agreement that will take the world into a new era of cooperation on climate change.

 

    According to a release, the decisions included a near agreement that carbon capture and storage may be an eligible project activity under the Kyoto Protocol's Clean Development Mechanism (CDM), provided it complies with stringent risk and safety assessments. The move is significant because it presents ministers, who will be asked to give political guidance to the negotiations, with only two clear options on the issue. UNFCCC Executive Secretary, Christiana Figueres said, "This conclusion is important because it gives Parties a key to unlock other outstanding issues under the two tracks of the negotiations on Long-Term Cooperative Action and in the Kyoto Protocol." 

 

    Another achievement was a decision to broaden the mandate of a Least Developed Countries (LDCs) Expert Group and extend it for a five-year term, the longest period given to the Group since its establishment in 2001. The Group provides technical guidance and advice to LDCs on the preparation and implementation of national adaptation programs of action. Countries also agreed to strengthen education, training and public awareness on climate change through increased funding for such activities, and to engage civil society more strongly in national decision-making and the UN climate change process. Figueres said, "Faster and more effective action on climate change requires governments to welcome the fresh ideas and active participation of all sides of civil society, especially the young whose futures are at stake. This underlines the commitment of the negotiations to remain open, transparent and engaged."

 

    In her brief statement on December 5, Espinosa, President of COP16/MOP6 meeting said, "No international conference can succeed without there being confidence among the parties and in the process itself. We believe that, after much hard work by all, current conditions should allow .indeed must allow. for the reaching of understandings. This is in no small measure due to a commitment by all to transparency and inclusiveness, principles that the Mexican Presidency will continue to honor throughout.

    "Ministerial-level representatives from all over the world are already in Cancun. Yesterday I offered a welcoming dinner to them, in which no papers were distributed and no negotiations took place. Starting today, however, the presence of high-level officials must be capitalized, as they can provide the necessary political guidance to push forth on several key issues. . . Allow me to stress this central point:Ministers have very kindly agreed to contribute to the work that is already under way, in which we have made important progress but still require political decisions to be taken in order to forge ahead.

    "I have approached pairs of ministers, one from a developing country and one from a developed country, who I know would greatly benefit our effort by focusing on specific matters. I hope their agendas allow them to undertake this task. Sweden and Grenada could help on matters related to shared vision; Spain and Algeria on adaptation; Australia and Bangladesh on finance, technology and capacity building; New Zealand and Indonesia on mitigation, including MRV [Measurable, Reportable, and Verifiable], and the United Kingdom and Brazil on items under the Kyoto Protocol. Other ministers, among them those from Ecuador, Singapore, Norway and Switzerland could support on other specific issues as they arise. . .

    "One week into the process, the conditions are in place to reach a broad and balanced package of decisions that leads to an era of increasingly effective global action on climate change. However, the positive outcome that our societies demand is still not complete. We must continue working with a renewed sense of urgency. I believe we can complete the package, or at the very least to make significant advances, before the opening of the high-level segment on Tuesday afternoon. . ."

    Access a release from the UN (click here). Access the complete statement from Espinosa (click here). Access a December 3, press briefing webcast from UNFCCC's Christiana Figueres (click here). Access the UNFCCC website for complete details, documents and live, on-demand webcasts (click here). Access the Mexico host country COP16 website (click here). Access detailed, day-by-day coverage from IISD (click here).

BP Commission: Oil & Gas Industry Must Embrace New Safety Culture

Dec 2: The National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling established by Executive Order 13543 on May 21, 2010, held its 6th and final public meeting on December 2-3, 2010. The Commission deliberated on the preliminary findings related to the root causes of the BP/Deepwater Horizon disaster and options to guard against and mitigate the impacts of future spills.

 

    The agenda of discussion items and staff presentations included: Safety Culture in the Offshore Drilling Industry; Regulatory Oversight; Environmental Review; Drilling in the Arctic; Oil Spill Response; Liability Caps and Financial Responsibility Draft Staff;
Commission Presentation for Containment; Impacts and Assessment Presentation; and Long-Term Restoration Presentation.

 

    In an opening statement from Co-Chair William Reilly, he said, "I am struck myself by the evolution in my own thinking in the course of the time that I have spent serving on this commission. I came into it persuaded as I think most people in the oil and gas industry may still be persuaded that this was a case of a company with at least a five-year history of severe safety challenges and misbehavior, and that we were dealing with essentially a rogue company. I think it has been conclusively and indisputably established that we have a bigger problem than that."

 

    Reilly indicated that three major companies were heavily involved in the decisions that are most questionable that were made on the Macondo rig, and "this perception in some quarters of the oil and gas industry that Macondo was the consequence of one company's bad decisions simply doesn't stand. Our investigative team concluded that three major companies were fully implicated in the catastrophe and our staff further reported that other companies had no effective containment preparations and laughable response plans that promised to look out for any polar bears or walruses that happened on to the scene. The poor state of containment and response plans and capability in the Gulf of Mexico is indisputable evidence of a widespread lack of serious preparation, of planning, of management. That culture must change. It must change for so many reasons for the good of all of us.  It must change among other reasons for the good of the oil and gas industry. . . So let me say as emphatically as I can the oil and gas industry needs to embrace a new safety culture. . ."

 

    Co-Chair Bob Graham in an opening statement said, "I would like to note that I am very impressed with what we have been able to accomplish without subpoena power. I remain mystified as to why a few Senators decided to deny this commission this power when subpoena power has been granted as almost an absolute for congressional commissions which have analogous responsibilities to ours. The lack of subpoena power has made our commissions work more difficult. Our success is a testament both to the determination and skill of our team and to the plain fact that the problems of and deficiencies with the current safety regime are so egregious. Over the next two years we will discuss our findings and how we propose to translate them into reforms that are worthy of our great nation."

 

    Access the opening remarks from Co-Chairs Reilly and Graham (click here). Access links to the current and past meetings and link to the 2-day agenda and extensive staff presentation and proposed recommendations (click here). Access the BP Commission website for more information (click here).

NASA-Funded Research Discovers Life Built With Arsenic

NASA-funded astrobiology research has changed the fundamental knowledge about what comprises all known life on Earth. Researchers conducting tests in the harsh environment of Mono Lake in California have discovered the first known microorganism on Earth able to thrive and reproduce using the toxic chemical arsenic. The microorganism substitutes arsenic for phosphorus in its cell components. Ed Weiler, NASA's associate administrator for the Science Mission Directorate at the Agency's Headquarters in Washington said, "The definition of life has just expanded. As we pursue our efforts to seek signs of life in the solar system, we have to think more broadly, more diversely and consider life as we do not know it."

    The finding of an alternative biochemistry makeup will alter biology textbooks and expand the scope of the search for life beyond Earth. The research is published in this week's edition of Science Express. Carbon, hydrogen, nitrogen, oxygen, phosphorus and sulfur are the six basic building blocks of all known forms of life on Earth. Phosphorus is part of the chemical backbone of DNA and RNA, the structures that carry genetic instructions for life, and is considered an essential element for all living cells. Phosphorus is a central component of the energy-carrying molecule in all cells (adenosine triphosphate) and also the phospholipids that form all cell membranes. Arsenic, which is chemically similar to phosphorus, is poisonous for most life on Earth. Arsenic disrupts metabolic pathways because chemically it behaves similarly to phosphate. 

    Felisa Wolfe-Simon, a NASA astrobiology research fellow in residence at the U.S. Geological Survey in Menlo Park, CA, and the research team's lead scientist said, "We know that some microbes can breathe arsenic, but what we've found is a microbe doing something new -- building parts of itself out of arsenic. If something here on Earth can do something so unexpected, what else can life do that we haven't seen yet?"

    The newly discovered microbe, strain GFAJ-1, is a member of a common group of bacteria, the Gammaproteobacteria. In the laboratory, the researchers successfully grew microbes from the lake on a diet that was very lean on phosphorus, but included generous helpings of arsenic. When researchers removed the phosphorus and replaced it with arsenic the microbes continued to grow. Subsequent analyses indicated that the arsenic was being used to produce the building blocks of new GFAJ-1 cells. The key issue the researchers investigated was when the microbe was grown on arsenic did the arsenic actually became incorporated into the organisms' vital biochemical machinery, such as DNA, proteins and the cell membranes. A variety of sophisticated laboratory techniques were used to determine where the arsenic was incorporated.

 

    NASA indicated that the results of this study will inform ongoing research in many areas, including the study of Earth's evolution, organic chemistry, biogeochemical cycles, disease mitigation and Earth system research. These findings also will open up new frontiers in microbiology and other areas of research. Carl Pilcher, director of the NASA Astrobiology Institute at the Agency's Ames Research Center in Moffett Field, CA said, "The idea of alternative biochemistries for life is common in science fiction. Until now a life form using arsenic as a building block was only theoretical, but now we know such life exists in Mono Lake."

    Access a release from NASA (click here). Access more information about the finding and a complete list of researchers (click here).

Salazar Announces Updated Oil & Gas OCS Leasing Strategy

Dec 1: Secretary of the Department of Interior (DOI) Ken Salazar announced an updated oil and gas leasing strategy for the Outer Continental Shelf (OCS). DOI indicated that based on lessons learned from the Deepwater Horizon oil spill, the Department has raised the bar in the drilling and production stages for equipment, safety, environmental safeguards, and oversight. In order to focus on implementing the reforms efficiently and effectively, critical Agency resources will be focused on planning areas that currently have leases for potential future development. As a result, the area in the Eastern Gulf of Mexico that remains under a congressional moratorium, and the Mid and South Atlantic planning areas are no longer under consideration for potential development through 2017. The Western Gulf of Mexico, Central Gulf of Mexico, the Cook Inlet, and the Chukchi and Beaufort Seas in the Arctic will continue to be considered for potential leasing before 2017. 

    Secretary Salazar said, "As a result of the Deepwater Horizon oil spill we learned a number of lessons, most importantly that we need to proceed with caution and focus on creating a more stringent regulatory regime. As that regime continues to be developed and implemented, we have revised our initial March leasing strategy to focus and expend our critical resources on areas with leases that are currently active [See WIMS 3/31/10]. Our revised strategy lays out a careful, responsible path for meeting our nation's energy needs while protecting our oceans and coastal communities."

    Consistent with the President's Executive Order on National Ocean Policy, the modified plan also confirms many actions announced in March, including environmental analysis to determine whether seismic studies should be conducted in the Mid and South Atlantic, and rigorous scientific analysis of the Arctic to determine if future oil and gas development could be conducted safely. Lease sales in the Western and Central Gulf of Mexico under the 2007-2012 program are currently scheduled to begin in approximately 12 months, after the Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE) completes appropriate environmental analyses that take into account effects of the Deepwater Horizon oil spill.

    Analyses and public meetings will also take place to help determine if additional lease sales in these areas should proceed as part of the 2012-2017 program. In connection with new announcement, BOEMRE Director Michael Bromwich stated that he is in the process of completing an agreement with the National Oceanic and Atmospheric Administration (NOAA) through which NOAA will collaborate with BOEMRE in the environmental analyses for OCS planning.

    American Petroleum Institute (API) President and CEO Jack Gerard warned that the Administration's decision could result in the loss of tens of thousands of American jobs, billions less in government revenues and an increasing dependence on foreign energy sources. He said, "As our country looks for ways out of the hole of lackluster economic growth and job creation, today's decision shows that this administration would rather keep digging than take the ladder to increased economic prosperity offered by developing our nation's domestic energy resources."

    He continued saying, "The oil and natural gas industry is a reliable vehicle for growing the economy and creating good-paying jobs. This decision shuts the door on new development off our nation's coasts and effectively ensures that new American jobs will not be realized. It will stifle investment, deny billions in revenue for critical government services and increase our dependence on foreign energy sources. The oil and natural gas industry is committed to safe and environmentally responsible operations, and both the industry and regulators have added new safeguards to ensure such operations.This reversal on new lease sales off America's coasts comes on top of a de facto moratorium, which has all but stopped new drilling in the Gulf of Mexico."

    Peter Lehner, executive director of the Natural Resources Defense Council (NRDC) said, "This action creates a no blow-out zone in the Atlantic and Pacific oceans and the Eastern Gulf. It protects these waters and the millions of Americans who depend upon them from the kind of catastrophic spill still poisoning the Gulf seven months after the BP disaster. It puts drilling off-limits in these areas for at least the next seven years. That's the right thing to do. The administration, though, did not go far enough."

    Lehner continued saying, "Leaving the door open to exploratory drilling, and, potentially, additional lease sales starting in 2012, in the Beaufort and Chukchi seas puts precious Arctic waters and habitat at risk. We don't yet know how to clean up oil in sea ice conditions, where oil breaks down slowly, if at all. These seas are home to one-fifth of the world's polar bears, as well as seals, migratory birds, endangered bowhead whales, beluga whales, walrus and other marine life. Until we know how to protect this region from the risk of a blow-out and how to clean up oil spills in Arctic waters, these areas, too, need to be off-limits to drilling. We are troubled, also, by the prospect of seismic testing in the Atlantic. Not only is such activity a general precursor to future drilling, but the tests themselves typically rely on high-intensity sound likened to undersea warfare. It harms endangered whales and fish on a vast scale. New seismic testing -- anywhere -- should use less-harmful technology and it should not be allowed at all in areas like the Atlantic that are not even being opened to leasing."

    Access a release from DOI with additional information and links to a fact sheet on the announcement, a map of the Revised Lower 48 OCS Oil and Gas Strategy, and a map of the Revised Alaska OCS Oil and Gas Strategy (click here). Access a release from API (click here). Access the complete statement from NRDC (click here).

Secretary Chu Calls Clean Energy Race A "Sputnik Moment"

Nov 29: In a speech at the National Press Club, U.S. Department of Energy (DOE) Secretary Steven Chu said that the success of China and other countries in clean energy industries represents a new "Sputnik Moment" for the United States, and requires a similar mobilization of America's innovation machine so that we can compete in the global race for the jobs of the future. Secretary Chu outlined efforts underway at the Department to give America's entrepreneurs and manufacturers an edge through investments in clean energy innovation.

    Secretary Chu said, "When it comes to innovation, Americans don't take a back seat to anyone -- and we certainly won't start now. From wind power to nuclear reactors to high speed rail, China and other countries are moving aggressively to capture the lead. Given that challenge, and given the enormous economic opportunities in clean energy, it's time for America to do what we do best: innovate. As President Obama has said, we should not, cannot, and will not play for second place."

    With 17 National Labs and world leading scientific and computing resources, DOE is on the front lines of America's effort to lead in clean energy innovation.  Clean energy technologies developed and deployed in the United States will create American jobs that stay in America. Secretary Chu detailed a number of promising research efforts now underway including what he called "Revolutionary Electric Vehicle Batteries" and "Converting Sunlight Into Usable Fuel."

    Secretary Chu said that China's investments in clean energy technologies represent both a challenge and an opportunity for the United States. While China's experience with rapid, large scale deployment of technologies makes it an important global testing ground and creates opportunities for scientific partnerships between our two countries, it also means that America cannot afford to take our scientific leadership for granted. Secretary Chu stressed that our economic competitiveness depends on jump-starting the next round of American innovation in clean energy. 

    Specifically, Secretary Chu highlighted several crucial technologies where the United States must innovate or risk falling far behind, such as: High Voltage Transmission; High Speed Rail; Advanced Coal Technologies; Nuclear Power; Alternative Energy Vehicles; Renewable Energy; and Supercomputing.

    Access a release from DOE with further details and link to Secretary Chu's complete presentation (click here).

U.S. Wants Progress At Cancun COP16 Climate Change Meeting

Nov 29: The United Nations Framework Convention on Climate Change Conference (UNFCCC) being held in Cancun, Mexico, begins today, November 29 and runs until December 10, 2010. The meeting encompasses the sixteenth Conference of the Parties (COP16) and the sixth Conference of the Parties serving as the Meeting of the Parties to the Kyoto Protocol (CMP6), as well as the thirty-third sessions of both the Subsidiary Body for Implementation (SBI) and the Subsidiary Body for Scientific and Technological Advice (SBSTA), and the fifteenth session of the AWG-KP and thirteenth session of the AWG-LCA.

 

    At a press conference on November 22, Todd Stern, U.S. Special Envoy for Climate Change discussed in some detail what the U.S. expects from the meeting. Stern also responded to a number of media questions which are available at the links below. Stern indicated, "I think, before us in Cancun and the one that we have been, frankly, focused on all year is to find a way to build on the progress made last year in the Copenhagen Accord through the direct intervention of many of the world's leaders, including President Obama. Even though it fell short of what many had hoped for, the Accord took an important step forward in addressing climate change. Progress was made on all the key elements of the negotiations, and much of it in direct, face-to-face discussions among our leaders.

    "In essence, the accord included, on the one hand, landmark provisions for financing in order to support mitigation, adaptation, technology, and forest preservation -- the so-called [REDD] issue -- all of these things redounding to the benefit of developing countries -- that on the one hand, and on the other hand, a crucial agreement among both developed and developing countries to implement a set of mitigation either targets or actions, and to do so in an internationally transparent manner.

    "What we are seeking now in Cancun is a balanced package of decisions on these points, decisions being a term of art in the framework convention. It is now widely understood that a legal treaty this year is not in the cards. There is broad convergence on the notion that a package of decisions is desirable and the devil will most certainly be in the details. To preserve the balance of the package in Cancun, we need to make comparable progress on all the core issues included in the accord that I've just noted.

    "We have heard a lot of talk this year about capturing the so-called low-hanging fruit by which countries who use that phrase often mean all the provisions dealing with financial and technology assistance, leaving the so-called hard issues of mitigation and transparency for sometime later. We are not doing that. Our leaders did not agree to that last year and we are not going to walk away from what our leaders agreed to. It is not the place of negotiators to try to trump their leaders' mutual pledges.

    "But if we do this right, we can have a successful meeting. There is a vision of progress within our reach that would start with first a set of solid decisions this year that includes an adequate level of detail on each of the core issues -- mitigation commitments, a green fund, transparency, technology, and so forth. Second, followed by a concentrated follow-on process for 2011, such as special working committees in which the remaining detail on all of these issues would be elaborated. And then this process would conclude with the third step, which would be fully operational decisions.

    "None of this would preclude or prejudge an eventual legal treaty when the time is right, but our view is that we should be making concrete progress now. In the often repeated view of the United States, a treaty requiring legally binding mitigation commitments from the U.S., the EU, Australia, Japan, other developed countries; would have to also require them of China, India, and other emerging economies, and we just don't see this happening soon. So rather than insisting on a legal treaty before anything happens, we should move down the pragmatic path of concrete operational decisions. And again, if we do this right, we can, in relatively short order, start standing up a green fund, create a new technology mechanism, start implementing significant mitigation commitments, put in place a system of transparency and accountability, and make real progress on adaptation and forest protection.

    "Now, let me take one moment to talk about the fast start finance commitment that developed countries agreed to last year in the Copenhagen Accord, namely to provide funding for developing countries, particularly vulnerable ones approaching $30 billion over a three-year period from 2010 to '12. This is, by the way, the one element of the Copenhagen Accord that we have treated as unconditional. In the U.S., we have been working hard to pull together as large a financial package as possible and to make what we are doing visible to recipient countries. The U.S. contribution to fast start funding in FY 2010, Fiscal Year 2010, is a total of approximately $1.7 billion, consisting of 1.3 billion of congressionally appropriated assistance and about $400 million worth of development finance and export credits. This financing is being used in a range of projects all around the world from adaptation activities in Africa and the small island states to assisting Indonesia with efforts to reduce deforestation to helping Andean countries address the impacts of tropical glacier retreat. In our view, these investments are not only good for developing countries; they are important for our own economic, environmental, and national security well-being.

    "With regard to transparency, I do want to announce today that a detailed executive summary of our fast start efforts is going up on the State Department website later today, as well as a special website for fast start financing that the Dutch Government is running. In addition, you will be able to find factsheets for the dozens and dozens of countries to whom the United States is providing fast start money. We will start by putting up countries from Africa -- again, I believe that will be later today – but we will also have country factsheets for all countries by the end of this week. . .

    "Let me then just sum up about Cancun. I would describe myself right now as neither an optimist nor a pessimist. I think the issues and the differences among countries are very real and the issues are challenging. As I indicated a few minutes ago, we do see a way forward, but only based on what our leaders agreed to last year in the Copenhagen Accord. We are not going backward and we expect other countries to join us in the same approach. The United States is eager to make progress in Cancun and is determined to do everything we can to ensure that that happens."

    Access the Todd Stern press briefing transcript (click here). Access the U.S. Fast Start Climate Financing in Fiscal Year 2010 website (click here). Access the Dutch government Fast-Start website for extensive details (click here). Access the UNFCCC website for complete details, documents and live, on-demand webcasts (click here). Access the Mexico host country COP16 website (click here). Access detailed, day-by-day coverage from IISD (click here).

GAO Reports On Coordination In WV Mountaintop Mining Reviews

Subscribers & Readers Note:
WIMS will not be publishing next week --
Thanksgiving Day week -- November 22-26, 2010.

We will resume Monday, November 29, 2010.

 

Nov 18: The U.S. Government Accountability Office (GAO) released a correspondence report entitled, Surface Coal Mining: Information on Clean Water Act Section 404 Permit Reviews under Enhanced Coordination Procedures in Appalachia, Focusing on West Virginia (GAO-11-101R, October 19, 2010). The correspondence was requested by Representative NickRahall (D-WV), Chairman of the House Committee on Natural Resources. 

    In 2009, West Virginia accounted for about 43 percent of the surface coal mining production in Appalachia. Surface coal mining in the mountainous areas of Appalachia -- a process often referred to as mountaintop mining -- has generated opposition in recent years because of its impact on landscapes, streams, ecosystems, and communities. In mountaintop mining, before the underlying coal can be extracted, the land is cleared of forest and other vegetation. Explosives or other techniques are then used to break up the overlying solid rock, creating dislodged earth, rock, and other materials known as "spoil." Some or most of the spoil is placed back on the mined-out area; however, spoil that cannot be safely placed back is often placed as "fill" in adjacent valleys or hollows. In some cases, this fill buries the headwaters of streams.

    Activities associated with surface coal mining are regulated under both the Surface Mining Control and Reclamation Act (SMCRA) and the Clean Water Act (CWA). SMCRA requires mine operators to obtain a permit before they begin mining. In West Virginia, the West Virginia Department of Environmental Protection (WVDEP) administers the SMCRA permit program, subject to the Department of the Interior's (Interior) Office of Surface Mining Reclamation and Enforcement's (OSM) finding that the state program is in accordance with federal law. OSM annually evaluates how well the state program is administered. At the beginning of 2009, many Clean Water Act (CWA) section 404 surface coal mining permit applications for operations in Appalachian states, including West Virginia, had been pending for over a year because of litigation and other issues, creating a backlog.

    A case challenging the adequacy of the Corps' analysis of environmental impacts on several section 404 permits was decided in the Corps' favor in February 2009. In March 2009, at U.S. EPA request, the Corps identified 48 pending permit applications that it anticipated would reach permitting decisions within 60 days. EPA reviewed these 48 applications and identified 6 for which it had substantial environmental concerns. The Corps processed the other 42 in accordance with existing procedures. For the 6 permit applications of concern, as of August 11, 2010, the Corps had issued section 404 permits for 2, EPA and the Corps were still reviewing 3, and the applicant had withdrawn 1. For the other 42 permit applications, the Corps issued permits for 28, 3 were withdrawn, 7 were withdrawn but later resubmitted, and 4 were pending, as of September 3, 2010.

    After EPA completed its review of these 48 permit applications, it, along with the Corps, worked together to develop enhanced coordination procedures (ECP) to review the remaining backlog of pending section 404 permit applications for the Appalachian states. The ECP was included as an element of an interagency action plan announced on June 11, 2009, through a memorandum of understanding signed by EPA, the U.S. Army, and Interior. In order to facilitate timely resolution of permit applications subject to the ECP, Corps districts and EPA regions are to discuss applications identified as requiring additional review and coordination before the beginning of the formal 60-day review process to reduce the total time necessary to reach agreement on each permit.

    Congress asked GAO to determine: (1) the number of surface coal mining permit applications at each stage of the ECP review process; (2) the extent to which EPA Region 3 and the Corps' Huntington District are coordinating during the stages of the review process; (3) how EPA has communicated the requirements an applicant needs to meet to receive a CWA section 404 permit in West Virginia; and, (4) what EPA and the Corps' plans are for processing new permit applications that were not among those listed as of June 11, 2009.

    As of August 11, 2010, for the 79 CWA section 404 permit applications on the final ECP list, the Corps had issued permits for 6 applications, 1 application was undergoing the 60-day ECP review process, 36 applications were awaiting the start of this process, and 36 applications had been withdrawn. Federal agencies took the following steps to develop the final ECP list that EPA published on September 30, 2009.

    First, at the request of EPA and other federal agencies, the Corps initially identified a list of 108 permit applications at various stages of review for which it had issued a public notice or coordinated with EPA, as of March 31, 2009, that needed additional evaluation. According to Corps officials, this list was developed quickly and contained 31 permit applications that the Corps and EPA subsequently decided should not be considered for the ECP. As a result, the two agencies removed the 31 applications and added 2, reducing the final ECP list to 79 applications. EPA worked to develop a consistent approach for reviewing these applications to determine if they should be subject to the ECP review process.

    To make this determination, EPA used its Multi-criteria Integrated Resource Assessment (MIRA) tool to assess the 79 applications against four general areas of concern, which it derived from regulations: (1) minimization and avoidance of impacts to aquatic resources, (2) water quality impacts, (3) cumulative impacts, and (4) mitigation measures. EPA concluded that all 79 applications had at least one area of concern, and it therefore included all 79 in the final ECP list that it published on September 30, 2009.

    Of the 79 applications, the Corps' Huntington District is responsible for reviewing 28. As of August 11, 2010, the Corps' Huntington District had issued permits for 5 applications, 15 applications were awaiting the start of the 60-day ECP review process, and 8 applications had been withdrawn. For one of the eight applications that had been withdrawn, the applicant redesigned the operation, reapplied, and received a section 404 permit outside of the ECP process, and an additional three are redesigning their applications and will be reapplying for a section 404 permit, according to the Corps' Huntington District.

    Access the complete 38-page report (click here).

BP Disaster A failure To Learn From Previous "Near Misses"

Nov 16: An interim report of preliminary findings from a committee of the National Academy of Engineering (NAE) and National Research Council (NRC) of the National Academy of Sciences (NAS) indicates that the numerous technical and operational breakdowns that contributed to the Deepwater Horizon oil rig explosion and spill from the Macondo well in the Gulf of Mexico suggest "the lack of a suitable approach for managing the inherent risks, uncertainties, and dangers associated with deepwater drilling operations and a failure to learn from previous 'near misses.'" The events also suggest insufficient checks and balances for critical decisions impacting the schedule for "abandoning" the exploratory well -- or sealing it in transition to production -- and for considering well safety. The NAS evaluation seem to provide confirmation of many of the same findings of the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling established by the President [See WIMS 11/9/10].

 

    Donald Winter, former secretary of the Navy, professor of engineering practice at the University of Michigan, and chair of the study committee said, "Important decisions made to proceed toward well abandonment despite several indications of potential hazard suggest an insufficient consideration of risks. It's also important to note that these flawed decisions were not identified or corrected by BP and its service contractors, or by the oversight process employed by the U.S. Minerals Management Service and other regulatory agencies."

 

    According to the report -- Interim Report on Causes of the Deepwater Horizon Oil Rig Blowout and Ways to Prevent Such Events -- it may not be possible to definitively establish which mechanisms caused the blowout and explosion, given the deaths of 11 witnesses on board, the loss of the oil rig and important records, and the difficulty in obtaining reliable forensics information from the Macondo well. Nevertheless, the committee believes it has been able to develop a good understanding of a number of key factors and decisions that may have contributed to the blowout of the well.

 

    The report cites numerous decisions that apparently contributed to the accident, beginning with continuing abandonment operations at the Macondo site despite several tests that indicated that the cement put in place after the installation of a long-string production casing was not an effective barrier to prevent gases from entering the well. The decision to accept the test results as satisfactory without review by adequately trained shore-based engineering or management personnel suggests a lack of discipline and clearly defined responsibilities. In addition, several clear failures in monitoring of the well appear to have contributed to its blowout; available data show hydrocarbons entered the well undetected for almost an hour before the first explosion. Timely and aggressive action to control the well was not taken, and for unknown reasons, hydrocarbons were funneled through equipment that vented them directly above the rig floor rather than overboard. These conditions made ignition "most likely," according to the report.  Finally, the blowout preventer did not seal the well once activated.

 

    Of particular concern is the lack of a systems approach to integrate the multiple factors impacting well safety, to monitor the overall margins of safety, and to assess various decisions from a well integrity and safety perspective. The report also notes that a previous loss of hydrocarbon circulation in the Macondo well more than a month before the accident presented an opportunity to take actions to mitigate future risks. 

 

    Several questionable decisions also were made about the cementing process prior to the accident, including attempting to cement across multiple hydrocarbon and brine zones in the deepest part of the well in a single operational step, making a hydraulic fracture in a low-pressure zone more likely; using a long-string production casing instead of a liner over the uncased section of the well; and deciding that only six centralizers were needed to ensure an even spacing between the formation rock and the casing, even though modeling results suggested that more centralizers would have been necessary. The type and volume of cement used to prepare for well abandonment and the time provided for the cement to cure may also have impacted the well's integrity [See WIMS 10/29/10].

 

    According to a release, for its final report, due in the summer of 2011, the NAS committee will examine ways to establish practices and standards to foster a culture of safety and methods to ensure that schedule and cost decisions do not compromise safety. The committee will assess the extent to which there are gaps, redundancies, and uncertainties in responsibilities of multiple agencies and professional societies overseeing deepwater drilling operations, and it will consider the merits of an independent technical review to provide operation checks and balances by enforcing standards and reviewing deviations. 

 

    The committee also notes that the Macondo well's blowout preventer was only recently recovered and is undergoing forensic analyses. The committee will evaluate possible causes for the failure of the blowout preventer once key data are made available.  Data on maintenance, testing, operating procedures, and reliability of alarms and other safety systems on the Deepwater Horizon rig will also be examined; testimony at other hearings indicate that various alarms and safety systems failed to operate as intended.

 

    Secretary of the Interior (DOI) Ken Salazar commented on the interim report saying, "I appreciate the rigorous work the experts on the NAE and NRC team have undertaken to understand the root causes of the Deepwater Horizon oil spill. Their independent, science-based analysis of what went wrong in the lead up to the blowout will help guide our continuing efforts to raise the bar for safety and oversight of offshore oil and gas operations, and will be of assistance to other ongoing investigations. I look forward to receiving the team's final report and to the additional insight and recommendations they will be providing us over the coming months."

    Bureau of Ocean Management, Regulation and Enforcement (BOEMRE) Director Michael Bromwich also commented saying, "The interim report by the NAE and NRC team raises important questions they will be exploring further in their ongoing review. Their work will help guide our continuing efforts to strengthen standards and oversight and underscores the importance of our ongoing efforts to build a strong and independent agency with the resources, training, and expertise to provide aggressive oversight of offshore oil and gas operations. I appreciate the time and expertise the NAE and NRC team are providing as we work towards ensuring that offshore energy production is conducted in a manner that protects human life and the environment."

    Also reacting to the report were Representatives Henry Waxman (D-CA) and Edward Markey (D-MA) the Chair of the House Energy and Commerce Committee and the Energy and Environment Subcommittee, respectively. The representatives issued a release saying that "in light of another report highlighting the systemic failures that led to the BP Deepwater Horizon disaster," the Chairmen believe the new BP CEO Bob Dudley should testify publicly about the changes BP has made to improve the safety of its operations.

Access a release from NAS (click here). Access the complete report and appendices (click here). Access the review committees website with additional information (click here). Access a release from DOI (click here). Access the Oil Spill Commission website for a additional background information (click here). Access a release from Waxman and Markey with links to their letters (click here).

Global Investors Call For Government Action On Climate Change

Nov 16: According to a release from the United Nations, the world risks economic crises larger than the recent global financial disruption unless governments, policy-makers and delegates to the forthcoming UN conference on climate change take action to combat global warming, major investors warned today. Nearly 260 investors from Asia, Africa, Australia, Europe, Latin America and North America, who collectively have assets valued at $15 trillion, said in joint statement that the potential climate-related gross domestic product (GDP) losses could soar up to 20 per cent by 2050 as a result of climate change. Citing the economic benefits of shifting to low-carbon and resource-efficient economies, they called for national and international policies that will spur private investment into green technology.

    Barbara Krumsiek, Chair of the UN Environment Programme (UNEP) Finance Initiative and Chief Executive Officer of the U.S.-based Calvert Investments said, "We cannot drag our feet on the issue of global climate change. Calvert is deeply concerned about the devastating impacts climate change -- if left unaddressed -- will have on the global economy." The statement was released ahead of the climate change conference in Cancún, Mexico, which will open on November 29 with the world trying to agree on a new international climate change regime to succeed the Kyoto Protocol to the UN Framework Convention on Climate Change (UNFCCC) under which industrialized countries committed themselves to a reduction of greenhouse gases.

    The UN release indicates that while low-carbon global investment is increasing, especially in Asia, the investors said more private capital would be available for renewable energy, energy efficiency and other low-carbon technologies, if stronger policies were adopted. They said that global clean energy investment is expected to rise to $200 billion this year, which is far less than the roughly $500 billion that Bloomberg New Energy Finance and the World Economic Forum says is needed per year by 2020 to restrict global warming to below 2 degrees.

    The UN said that North America lags well behind Europe and Asia in clean energy investment, having committed $20.7 billion in renewable energy projects in 2009, compared to $43.7 billion for Europe and $40.8 billion for Asia, according to a recent UNEP report. Ole Beier Sørensen, chairman of the Institutional Investor Group on Climate Change and chief of Research and Strategy at the Danish pension fund ATP said, "A basic lesson to be learned from past experience in renewable energy is that, almost without exception, private sector investment in climate solutions has been driven by consistent and sustained government policy. Experiences from countries such as Spain, Germany and China show how structured policies can bolster investor confidence and help drive renewable energy investments."

    Citing potential climate-related GDP losses of up to 20 percent by 2050 and the economic benefits of shifting to low-carbon and resource-efficient economies, investors released a major statement today calling for national and international policies that will spur private investment into low-carbon technologies. The statement was signed by 259 investors from North America, Europe, Asia, Australia, Latin America and Africa with collective assets totaling more than $15 trillion -- more than one-quarter of global capitalization. Signatories included Allianz, HSBC, APG and a dozen U.S. public pension funds and state treasurers. It is the largest-ever group of investors to call for government action on climate change.

    Mindy Lubber, president of Ceres and director of the Investor Network on Climate Risk said, "Current investment levels fall well short of what is needed to stem the rise of global temperatures and adapt to a warming world. Strong government policies that reward clean technologies and discourage dirty technologies are essential for closing the climate investment gap and building a low-carbon global economy."

    U.S. investors had a particularly sharp message for the new U.S. Congress. Jack Ehnes, chief executive officer of the California State Teachers' Retirement System, the nation's second largest public pension fund with $141 billion in assets said, "Climate change may be out of vogue in Washington today, but it poses serious financial risks that are not going away and will only increase the longer we delay enacting sensible policies to transition to a low-carbon economy. The nation's leaders should take the cue from California, where strong clean energy policies have spurred American innovation and created thousands of jobs."

    The investors' statement calls for the following domestic policies in both developed and developing countries:

• Short-, mid- and long-term greenhouse gas reduction targets
• Energy and transportation policies to accelerate deployment of energy efficiency, renewable energy, green buildings, clean vehicles and clean fuels;
• Strong and sustained price signals on carbon emissions and well-designed carbon markets;
• Phase out fossil-fuel subsidies, as agreed to by G-20 leaders in 2009;
• Adaptation measures to reduce unavoidable climate change impacts, and;
• Corporate disclosure of material climate-related risks.

    The investors said in a release, "While no comprehensive agreement is expected, investors are hoping for some forward movement during the international negotiations in Cancun. Among the investors' key priorities is delivery of promised fast-start climate financing, consistent with pledges at last year's UN climate negotiations in Copenhagen. The US and other developed countries vowed at that time to channel up to $100 billion a year of climate finance from multiple sources by 2020, including additional $30 billion of 'fast-start' funding from 2010 to 2012."

 

    Donald MacDonald, trustee, BT Pension Scheme, and chair, Principles for Responsible Investment said, "This statement shows investors are serious about the risks posed by climate change and the importance our community places on action by government to reach a global agreement. Investors need greater policy certainty from governments. Deferring climate change agreement adds to investor concerns that climate change risks and costs are not taken seriously. The Cancún talks provide an opportunity for all concerned governments to take leadership on this important issue and start framing an agreement needed to create a sustainable investment environment."

 

    Access a release from the UN (click here). Access a release from Ceres (click here). Access the 10-page 2010 Global Investor Statement on Climate Change (click here). Access the press conference audio (click here).

President Proclamation & New Task Force On Electronic Waste

Nov 16: U.S. EPA announced that yesterday, on America Recycles Day, President Obama signed a proclamation celebrating the strides the country has made in recycling generally, while also highlighting the need for greater attention to addressing electronic waste (e-waste). Last week, the Council on Environmental Quality (CEQ), EPA, and the General Services Administration (GSA) formed a task force, under the Executive Order on Federal Sustainability, charged with helping the Federal government lead by example in responsibly managing used electronics.

    In a release EPA said electronic waste from old cell phones, computers and other devices often contains toxic chemicals and heavy metals. Most of this waste is landfilled, which creates potential health and environmental hazards throughout the U.S., and a "significant part of the rest is shipped to developing countries that lack the capacity to manage these wastes safely, threatening the health and environment of those communities." Reusing and recycling e-waste reduces the risks from these hazards and also provides opportunities to reduce the carbon footprint and conserve valuable natural resources.

    EPA Administrator Lisa Jackson said, "Used electronics represent the fastest growing segment of local solid waste in our country. Far too many used electronics end up in landfills or are exported to nations where there is little capacity for safe management. Rather than benefitting from the reuse and recycling of valuable components, we see increased exposure to the toxic chemicals and other harmful substances in electronic devices. EPA has made the handling of used electronics and e-waste one of our top priorities, and through this task force the U.S. can become the world leader in sustainable electronics management. There are cost-effective and potentially profitable methods to better manage these materials and prevent health and environmental threats at home and around the world."

    Nancy Sutley, Chair of CEQ said, "The federal government has a responsibility to ensure that its own waste is properly managed and recycled. Identifying opportunities to reuse the valuable resources contained in most disposed electronic devices is an important part of our obligation to protect human health and the environment." GSA Administrator Martha Johnson said, "Already one of the largest consumers of electronics, we plan to make the federal government the most responsible. Not only will we reduce the federal government's footprint, we will model behavior for private consumers and use our position in the marketplace to drive the development of sustainable electronics and recycling solutions."

    According to the release, the interagency task force, co-chaired by EPA, GSA, and CEQ, will develop a national strategy for responsible electronics stewardship, including improvements to Federal procedures for managing electronic products. The strategy will also "include steps to ensure electronics containing hazardous materials collected for recycling and disposal are not exported to developing nations that lack the capacity to manage the recovery and disposal of these products in ways that safeguard human health and the environment."

    On October 11, EPA Administrator Lisa Jackson visited the town of Guiyu in Guandong Province, China. Guiyu is noteworthy for its large electronic waste recycling industry. Jackson saw firsthand some of the approaches being used to recycle and reuse discarded electronics and appliances and discussed remaining challenges and opportunities for collaboration.

    EPA said reusing or recycling electronics helps the environment by reducing our carbon footprint and conserving resources. Electronic equipment contains valuable materials, such as precious metals and rare earth minerals, which can be recycled. Recycling these components conserves materials, prevents air and water pollution, and reduces greenhouse gas emissions that occur during extraction, manufacturing and processing. For example, for every 1 million cell phones recycled, 75 pounds of gold, 772 pounds of silver, 33 pounds of palladium, and more than 35,000 pounds of copper can be recovered.

    EPA indicated that electronics and other products are usually created from raw materials that are extracted from the Earth, transported and processed, distributed, consumed, reused or recycled, and ultimately disposed. Each of these stages creates impacts on the environment, which are unsustainable with limited natural resources. By making smarter choices, consuming less, and reusing and recycling, everyone can contribute to a healthier and more sustainable environment. Also, by promoting responsible electronics stewardship, green jobs can be created and a vibrant American reuse, recycling and refurbishing industry can be built.

 

    Specifically, the Proclamation states in part, "While we can celebrate the breadth of our successes on America Recycles Day, we must also recommit to building upon this progress and to drawing attention to further developments, including the recycling of electronic products. . . To address the problems caused by electronic waste, American businesses, government, and individuals must work together to manage these electronics throughout the product lifecycle -- from design and manufacturing through their use and eventual recycling, recovery, and disposal. To ensure the Federal Government leads as a responsible consumer, my

Administration has established an interagency task force to prepare a national strategy for responsible electronics stewardship, including improvements to Federal procedures for managing electronic products. This strategy must also include steps to ensure electronics containing hazardous materials collected for recycling and disposal are not exported to developing nations that lack the capacity to manage the recovery and disposal of these products in ways that safeguard human health and the environment. . ."

 

    According to a CEQ letter on the newly established Task Force, "CEQ will coordinate the initial convening of the Task Force and provide any necessary policy direction to guide the process. Within 180 days from the date of this memorandum [November 8, 2010], the Task Force shall deliver to CEQ a national framework that includes:

• An action plan directing Federal agencies to exercise all appropriate authorities to achieve the electronic stewardship goals, consistent with domestic and international law;
• Recommendations for a system-based approach to the long-term design, management and disposal of Federal used electronics;
• Recommendations for information gathering and tracking, regulatory options, and best management practices for used electronics that can be used by the Federal agencies and leveraged to the private sector;
• A plan to build partnerships in the public and private sector for sustainable electronics management nationwide; and,
• A plan to reduce exports of used electronics to developing countries that lack capacity to properly manage them, and assess how Federal agencies can improve their ability to deter these exports. The plan will include a strategy to build capacity within and share best practices with developing countries, so they can improve their ability to safely handle used electronics, while promoting economic development.

    Interestingly, neither the EPA release, nor the Proclamation mention the fact that as recently as this fall two major competing electronic waste recycling programs, operated by Institute of Scrap Recycling Industries (R2) and the Basal Action Network (e-Stewards), have announced major developments in their programs designed to prove their validity, independence and authentication [See WIMS 9/28/10]. The two programs have now created a confusing system for the public and private sectors to participate in responsible electronics recycling. While EPA Administrator Jackson has said that the issue of proper management of E-waste is a major international priority of the U.S. and the Commission for Environmental Cooperation, EPA has done little to provide clarity to the two competing and confusing programs. In general, EPA has said it supports both programs, however, the competing programs have different operating practices, conflicting vendor auditing and certifications and different requirements on exporting and processing waste to and by foreign countries or facilities.

 

    On its website, EPA states that, "Recently, steps were taken to significantly increase safe reuse and recycling of electronics equipment. Electronics recyclers now have the ability to become certified to responsible recycling standards by demonstrating to an accredited, independent third party that they can, and do, meet available standards. EPA encourages all electronics recyclers to become certified to these new recycling standards and that customers who use electronics recyclers choose recyclers that are certified. EPA supports and will continue to push for further safe and protective recycling efforts and encourage improvements in best management practices for recyclers. There are existing recycling certification programs, such as R2 and e-Stewards, that EPA believes advance environmentally safe practices and include standards for use in third party certification of such efforts."

 

    The EPA release and Proclamation also did not mention the massive October 21 report from the U.S. Department of Justice Office of the Inspector General (OIG) entitled, A Review of Federal Prison Industries' Electronic-Waste Recycling Program. The main 433-page report and 1008-page Appendix found that staff and inmates at several Bureau of Prisons (BOP) facilities, have been exposed to toxic metals including cadmium and lead in the electronic waste recycling program run by the Federal Prison Industries -- also known as UNICOR [See WIMS 10/28/10]. OIG said, "Our investigation found that prior to 2009 UNICOR's management of the e-waste recycling program resulted in numerous violations of health, safety, and environmental laws, regulations, and BOP policies. We concluded that UNICOR's Headquarters staff poorly managed UNICOR's e-waste program prior to 2009."

 

    Access a release from EPA (click here). Access the Proclamation (click here). Access more information on the Interagency Task Force on E-waste Management (click here). Access further information from the EPA eCycling website (click here). Access further background information from previous WIMS postings on electronic waste (click here).  Access the ISRI Certified Electronics Recycler® Program (click here). Access the BAN Certified e-Stewards® Initiative (click here). Access the BAN e-Stewards standard (click here). Access the ISRI R2 Practices (click here).

G-20 Leaders Still Committed To End Fossil Fuel Subsidies

Nov 12: The White House issued a fact sheet outlining the accomplishments of G-20 Summit as it relates to energy issues. Many observers including the International Energy Agency's (IEA's) were watching closely to see if the G-20 leaders would make good on their promise of a year ago to phase out fossil fuel subsidies [See WIMS 11/10/10]. According to the White House, the Seoul, South Korea Summit of G-20 Leaders re-affirmed their commitment to the groundbreaking decision taken at the Pittsburgh in 2009 to phase out fossil fuel subsidies in the medium term. 

 

    According to the summary, the leaders recognized the substantial progress that has already been made in the last 14 months and agreed to monitor their progress over the next year. The White House said, "Phasing out fossil fuel subsidies is important because it encourages energy conservation, improves our energy security, helps us meet budget goals and provides a critical down payment on our commitment to reduce greenhouse gas emissions. A gradual multilateral removal (by 2020) of existing fossil fuel subsidies could result in global greenhouse gas emissions dropping by 10% by 2050 relative to what is otherwise expected.
 
    Leaders also agreed to take concrete steps to make the world's physical oil markets more transparent and to continue to improve the regulation of financial oil derivative markets. The actions are expected to reduce the volatility of oil prices, thereby benefiting both energy producers and consumers.
 
    At Pittsburgh last year, the G-20 leaders committed to rationalize and phase out inefficient fossil fuel subsidies over the medium term [See WIMS 9/22/09]. The G-20 countries subsequently have:

• Put forward national strategies and timeframes to meet this commitment: G-20 countries have developed individual strategies and timeframes for rationalizing and phasing out inefficient fossil fuel subsidies, and are now working on identifying the resources needed to implement national strategies.
• Made substantial progress over the last 14 months. A number of countries have already made policy decisions in accordance with the G-20 commitment. In Mexico, the government has begun phasing out motor fuel subsidies while conducting a household-level census of fuel consumption that will allow the government to implement a well-targeted support program to compensate low-income households. In June 2010, India decontrolled gasoline prices and raised the prices for diesel, kerosene, and liquid petroleum gases (LPG). India also announced plans to phase out the remaining diesel subsidy in the medium term. This year, both Russia and China initiated programs raising the price of natural gas paid by their domestic consumers.
• Committed to re-assess progress next year. The International Energy Agency (IEA), World Bank, and Organization for Economic Cooperation and Development (OECD) submitted to G-20 Leaders in Seoul a Joint Report updating an earlier analysis to reflect the new phase-out policies implemented this year. The report found that substantial progress had been made, but that the value of fossil fuel consumption subsidies remained over $300 billion in 2009, a heavy burden on government finances that displaces important public investments, worsens balance of payments, leads to underinvestment in infrastructure, and contributes to energy shortages. The G-20 leaders asked the international organizations to update their report and assess progress being made in advance of the G-20 Summit next year as a means of holding themselves accountable to their commitment to phase out fossil fuel subsidies.
• President Obama is committed to working with Congress to phase out over $3 billion a year in preferential tax incentives for the coal, oil, and gas industries, consistent with the FY2010 and FY2011 budget proposals.

    G-20 Leaders also took steps to reduce oil price volatility in the future. They asked international organizations to improve reporting on global oil production, consumption, and inventories as a means of increasing market transparency. They also called on regulators to implement International Organization of Securities Commissions (IOSCO) recommendations on improving commodity financial market data, market transparency, and regulatory cooperation and take steps needed to combat market manipulation by ensuring that they have the necessary legal framework to detect and take appropriate enforcement action. They said the efforts will help make sure energy markets work well and enhance market integrity.

• Leaders asked the International Energy Forum (IEF), the IEA, and the Organization of the Petroleum Exporting Countries (OPEC) to identify specific steps that would improve the quality, timeliness, and reliability of the Joint Oil Data Initiative (JODI).
• The United States, through the Dodd-Frank Act, has implemented important reforms to improve the transparency and oversight of OTC derivative markets, including OTC financial oil products.

    Access a fact sheet from the White House (click here).

GAO On Federal Government's Financial Exposure In BP Spill

Nov 12: The Government Accountability Office (GAO) released correspondence entitled, Deepwater Horizon Oil Spill: Preliminary Assessment of Federal Financial Risks and Cost Reimbursement and Notification Policies and Procedures (GAO-11-90R, November 12, 2010). GAO indicates that because the total costs of the Deepwater Horizon oil spill are still unknown, the Federal government's financial exposure as a result of the oil spill is also unknown.

 

    GAO notes that the total cost to clean up this massive and potentially unprecedented spill, the damage to the environment, as well as the potential impact to the livelihood and economic status of businesses and individuals in the region will undoubtedly be significant, with "current estimates from BP and Oxford Economics in the tens of billions of dollars." BP has voluntarily established a Trust to be funded incrementally up to $20 billion, has paid other costs outside of the Trust, and has stated that it will continue to pay additional costs. BP's financial condition and its continuing resolve to stand behind its public commitments will be key factors if additional costs need to be paid.

 

    Certain statutory limits on the amount of Federal funds available for response costs and damages are intended to mitigate the exposure. For example, the Oil Pollution Act of 1990, as amended (OPA) establishes caps on the amount of funds that can be expended on each oil spill. NPFC has billed the Responsible Parties for the Deepwater Horizon oil spill $581 million for response activities performed by nine Federal government agencies and various state government agencies. After the U.S. Coast Guard's National Pollution Funds Center (NPFC) authorizes reimbursement, the government agencies are paid from the Fund for actual expenditures. BP has paid NPFC $518.4 million as of October 12, 2010. The Fund is at risk of reaching the OPA-established $1 billion per incident cap on total expenditures in the relatively near future. Consequently, unless the statute is amended to exclude amounts reimbursed by Responsible Parties from the cap, the Fund may be unable to pay any OPA compensable claims or other Deepwater Horizon oil spill-related costs above that limit.

 

    GAO indicates that, "Our preliminary assessment of the design of Coast Guard's NPFC's policies and procedures for obtaining reimbursement for Deepwater Horizon oil spill costs found they did not always reflect current practices and were not sufficiently detailed to ensure they could be followed consistently." For example, NPFC's procedures for identifying and notifying Responsible Parties are dated 1996, when the Coast Guard was part of Department of Transportation, and are marked "draft."

 

    The Federal government has been involved in overseeing Responsible Parties' claims processing resulting from the Deepwater Horizon oil spill. Following the spill, DOJ, the Department of Homeland Security (DHS) and various other Federal agencies have been overseeing the establishment of a claims process and monitoring claims processing activities by BP on behalf of the designated Responsible Parties. Congress may wish to consider amending OPA or enacting new legislation that eliminates the Fund's $1 billion per incident expenditure cap to the extent that it does not take into account reimbursements from Responsible Parties. In this regard, Congress may want to consider setting a Fund cap associated with an incident based upon net expenditures (expenditures less reimbursements).

 

    In order to help establish and maintain effective cost reimbursement policies and procedures for the Fund, GAO recommends that the Secretary of Homeland Security direct the Director of the U.S. Coast Guard's NPFC to update NPFC's policies and procedures to include: (1) current Fund reimbursement billing practices that reflect both a percentage of federal agencies' obligations as well as expenditures; and, (2) specific procedural guidance on processing DOD requests for reimbursement using Military Interdepartmental Purchase Requests (MIPRs).

 

    In order to ensure that all Responsible Parties are properly notified of their responsibilities for an oil spill, GAO recommends that the Secretary of Homeland Security direct the Director of NPFC to: (1) update NPFC's current policies to reflect current organization and structure and managements' directives; and, (2) update NPFC's current procedures to provide detailed guidance and procedures for identifying and documenting all Responsible Party notifications.

 

    Access the complete 57-page GAO report (click here).

Parties Urge G20 Leaders To Address Fossil Fuel Subsidies

 Subscribers & Readers Note: WIMS will not be publishing tomorrow,
November 11, 2010, in observance of the Federal Veterans Day holiday

 

Nov 9: As world leaders gather in the Republic of Korea for the latest meeting of the Group of 20 (G20) major economies, the head of the United Nations Environment Programme (UNEP) Achim Steiner is calling on them to build on their previous pledge to move towards a green and more sustainable recovery from the financial crisis with more concrete action. The G-20 consists of the finance ministers and central bank governors of 19 countries: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom and the United States of America, and also the European Union who is represented by the rotating Council presidency and the European Central Bank. The G-20 represents more than 85 percent of the global economy [See WIMS 3/31/09].

   Steiner said in an opinion piece published in the Korean JoongAng Daily newspaper,  "A year ago in London, G20 leaders articulated this vision as building an 'inclusive, sustainable and green recovery.'" Steiner asks the question, "Could this week in Seoul be a watershed in international financial and economic affairs, where the pledge, made at the G-20 in London, toward a green and more sustainable recovery moves from communique to concrete commitment?"

    He said, "An increasing number of banks and pension funds see rising risks to their investments from the loss of ecosystems, such as forests and wetlands, and the multitrillion dollar services they produce. And a rising number now see the disruption to food supplies, supply chains and other challenges linked with natural resource losses as a bigger threat than that from international terrorism. This dramatic shift is in part linked with the findings of the Economics of Ecosystems and Biodiversity (TEEB), an assessment requested by the G-8 and developing country environment ministers."

    Steiner continued saying, "In terms of combating climate change and restoring fish stocks, canceling or phasing-down global subsidies totaling up to US$700 billion and over US$27 billion a year respectively would be a good start. . . In Seoul, this vision needs to be evolved toward not only a green recovery, but to inclusive, sustainable green growth underpinned by clean technologies and the economic importance of maintaining nature's multitrillion dollar services."

    On the subject of fossil fuel subsidies, two NGOs -- Oil Change International and Earth Track -- have released the first independent evaluation of the success of the G20 Pledge to phase out fossil fuel subsidies. The report, G20 Fossil-Fuel Subsidy Phase Out: A review of current gaps and needed changes to achieve success, reveals large gaps in the reporting of subsidies, and that "no new actions have been taken by G20 nations as a result of their commitment in Pittsburgh to phase out fossil fuel subsidies." In Pittsburgh in September 2009, G20 leaders pledged to "rationalize and phase out over the medium term inefficient fossil fuel subsidies that encourage wasteful consumption."

    Last September, for example, President Obama said, "I am proud to say that the United States has done more to promote clean energy and reduce carbon pollution in the last eight months than at any other time in our history. We are making our government's largest ever investment in renewable energy -- an investment aimed at doubling the generating capacity from wind and other renewable resources in three years. . . Later this week, I will work with my colleagues at the G20 to phase out fossil fuel subsidies so that we can better address our climate challenge. . ." [See WIMS 9/22/09].

    Steve Kretzmann of Oil Change International said, "Each G20 country has defined 'inefficient fossil fuel subsidy' as they like, reported on what they want, and then listed either no subsidies, or things that they had already said they were doing. There is no accountability, no oversight and review, no actual mechanism to hold these leaders to their words. Some of the analysis coming out of the OECD and IEA is quite helpful, but so far, in the process itself, there's just no action behind the words of the G20."

    At the launch of the latest edition of the International Energy Agency's (IEA's) annual World Energy Outlook (WEO-2010) in London, Executive Director Nobuo Tanaka said, "The Copenhagen Accord and the agreement among G20 countries to phase out subsidies are important steps forward. But, these moves still fall a very long way short of what is required to set us on the path to a truly sustainable energy system. The energy world is facing unprecedented uncertainty. The strength of the economic recovery holds the key to how energy markets will evolve over the next few years. But WEO-2010 demonstrates that it is what governments do, and how that action affects technology, the price of energy services and end-user behavior, that will shape the future of energy in the longer term. We need to use energy more efficiently and we need to wean ourselves off fossil fuels by adopting technologies that leave a much smaller carbon footprint."

    WEO-2010 indicates that the oil price is set to rise, reflecting the growing insensitivity of both demand and supply to price. In the New Policies Scenario, the average IEA crude oil price rises from just over $60 in 2009 to $113 per barrel (in year-2009 dollars) in 2035. Oil demand continues to grow steadily, reaching about 99 million barrels per day (mb/d) by 2035 — 15 mb/d higher than in 2009. All of the net growth comes from non-OECD [Organization for Economic Cooperation & Development] countries, almost half from China alone; demand in the OECD actually falls, by over 6 mb/d. Crude oil output reaches an undulating plateau of just under 69 mb/d by 2020 while production of natural gas liquids (NGLs) and unconventional oil – notably Canadian oil sands – grows strongly. OPEC countries account for a growing share of global production, with the biggest increases coming from Saudi Arabia and Iraq. Production in and exports of oil (and gas) from the Caspian region also grow substantially.

 

    The WEO-2010 report analyzes various alternatives and paints a bleak picture regarding advancement to greener energy and achieving necessary reductions in greenhouse gases [GHG] to avoid dangerous climate change. The report indicates, "The energy trends envisioned in the New Policies Scenario imply that national commitments to reduce greenhouse-gas emissions, while expected to have some impact, are collectively inadequate to meet the Copenhagen Accord's overall goal of holding the global temperature increase to below 2°C. Rising demand for fossil fuels would continue to drive up energy-related carbon-dioxide (CO2) emissions through to 2035, making it all but impossible to achieve the 2°C goal, as the required reductions in emissions after 2020 would be too steep. The New Policy Scenario trends are in line with stabilizing the concentration of greenhouse gases at over 650 parts per million (ppm) of CO2-equivalent (eq), resulting in a likely temperature rise of more than 3.5°C in the long term.

 

    "In order to have a reasonable chance of achieving the goal, the concentration of greenhouse gases would probably need to be stabilized at a level no higher than 450 ppm CO2-eq. The 450 Scenario describes how the energy sector could evolve were this objective to be achieved. It assumes implementation of measures to realize the more ambitious end of target ranges announced under the Copenhagen Accord and more rapid implementation of the removal of fossil-fuel subsidies agreed by the G-20 than assumed in the New Policies Scenario. This action brings about a much faster transformation of the global energy system and a correspondingly faster slowdown in global CO2 emissions. For example, oil demand peaks just before 2020 at 88 mb/d, only 4 mb/d above current levels, and declines to 81 mb/d in 2035. Coal demand peaks before 2020. Demand for gas also reaches a peak before the end of the 2020s. Renewables and nuclear double their current combined share to 38% in 2035. A lack of ambition in the Copenhagen Accord pledges has increased our estimated cost of reaching the 2°C goal by $1 trillion and undoubtedly made it less likely that the goal will actually be achieved. Doing so would require a phenomenal policy push by governments around the world."

 

    In analysis that builds on the IEA's ongoing work for the G-20, WEO-2010 reveals that fossil-fuel subsidies amounted to $312 billion in 2009. Tanaka said, "Getting the prices right, by eliminating fossil-fuel subsidies, is the single most effective measure to cut energy demand in countries where they persist, while bringing other immediate economic benefits." According to the IEA these consumption subsidies were down from US $558 billion in 2008 largely because oil prices declined in 2009. Conversely, these oil subsidies are set to climb in 2010 with increasing oil prices.

 

    Bliss Baker, spokesperson for the Global Renewable Fuels Alliance (GRFA) said, "As we strive to develop alternatives to oil we must recognize that we are not competing on a level playing field. Massive multi-billion dollar oil subsides are a serious obstacle to the development of cleaner greener alternatives. Oil has a huge competitive advantage financed by global taxpayers. Despite the IEA's optimism that there is momentum for reducing subsidies, not one country has eliminated an oil subsidy program since signing on to the pledge in 2009."

 

    Baker cited the Earth Track report indicating that many countries continue to provide direct producer subsidies to oil companies including: Canada provides over US $2 billion per year to oil companies; U.S. producer subsidies reached US  $52 billion in 2009; and European Union provided US $8 billion in subsidies to oil companies in 2009. Baker said, "It is time for the G20 to show leadership and reverse this practice of never ending subsidies to big oil. It is time to move beyond oil to a world with sustainable alternatives to crude oil such as biofuels and other renewable forms of energy."

    Access a release from the UN (click here). Access the complete opinion piece from UNEP's Steiner (click here). Access a release from the NGOs and link to their complete report (click here). Access extensive information and the complete WEO-2010 (click here). Access a release from GRFA (click here). Access the G20 website for more information on the meeting (click here).